TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether the transactions and agreements executed on 8th and 10th April 2019 (the "2019 Agreements") assigning the Jigaon Project work to the Applicant can be validated under Section 536(2) of the Companies Act, 1956 despite the pendency of winding up proceedings, and whether objections based on insufficiency of stamp duty and lack of departmental approval defeat such validation.
Analysis: The statutory framework under consideration includes Section 536(2) of the Companies Act, 1956 which renders dispositions after commencement of winding up void unless the court orders otherwise, read with Section 441(2) and Section 449 of the Companies Act, 1956. Authorities establish that the word "void" in Section 536(2) admits the court's discretion to validate post-presentation dispositions where transactions are bona fide, fair, just and reasonable and in the interest of the company, its creditors or public interest; complete nullity is not the inevitable consequence. The 2019 Agreements, executed in context of the Company's admitted financial incapacity and the need to prevent penalties and terminate risk to the Joint Venture and public works, transferred liabilities and payment mechanisms (including escrow operation) to the Applicant and were acted upon (site mobilisation advance, escrow deposits, completion progress and waiver of fines). Prior Division Bench and Supreme Court orders had recorded that prima facie the sub-contracting appeared for the overall benefit of the Joint Venture and Applicant, and those findings remain unchallenged. Objections based on insufficiency of stamp duty were considered in light of the law distinguishing inadmissibility (Stamp Act Sections 33, 35) from invalidity; non-stamping is a curable defect and does not, by itself, render a transaction incapable of validation where documents have been acted upon. Objections based on departmental approval were addressed on the footing that the correspondence had been considered by appellate courts and did not preclude the internal arrangements among JV constituents from being validated when acted upon and in the public interest. Applying the established discretionary test, the 2019 Agreements were found to have been entered into bona fide, to transfer liabilities and enable completion of the Jigaon Project, and to serve the interests of the Company, the Joint Venture and public interest, thereby satisfying the criteria for validation under Section 536(2).
Conclusion: The Interim Application is allowed; the transaction of assigning the Jigaon Project work to the Applicant as evidenced by the 2019 Agreements is validated under Section 536(2) of the Companies Act, 1956. The Official Liquidator's Report prayers (a) to (g) are rejected. Prayer clauses (h) onwards are disposed of as not pressed.
Ratio Decidendi: Where dispositions of a company's property occur after presentation of a winding up petition, the court may, in exercise of its equitable discretion under Section 536(2) of the Companies Act, 1956, validate such dispositions if they are bona fide, fair, just and reasonable and shown to be necessary or expedient in the interest of the company, its creditors or the public; insufficiency of stamp duty renders a document inadmissible but is a curable defect and does not by itself preclude validation.
TaxTMI 
TaxTMI 
